New Jersey is an equitable distribution state when it comes to division of marital property in a divorce. That means a New Jersey divorce won’t automatically result in a 50-50 split of property. Rather, as explained in NJ Rev. Stat. § 2A:34-23.1, it will be divvied up in a way the court deems as fair as possible, but not necessarily equal.
There is a multi-step process to this determination, which involves identification of marital assets subject to distribution, valuation of those assets and then distribution – over which the court has broad discretion. These are important questions, which is why it’s important to discuss them with a divorce attorney in New Brunswick. The issue of division of assets and debts are often more complex than they may appear at first blush. This is particularly true when a couple has been married for several years and have numerous properties, savings accounts, stocks and other assets.
RSUs as Marital Property in New Jersey Divorce
Recently, the Superior Court of New Jersey Appellate Division ruled in K.C. v. D.C. that restricted share units (RSUs) awarded to husband four months after the New Jersey divorce was filed are in fact subject to equitable distribution, and the trial court did not err in including them in the marital estate to be divided. Wife was awarded 50 percent of that stock.
The couple was married for 15 years before a complaint for divorce was filed. While wife was a college graduate, she left the workforce shortly after their children were born and did not work outside the home thereafter. Husband was a consultant who earned between $400,000 and $600,000 annually. In addition to awards of alimony and child support, the trial court was asked to equitably divide the couple’s assets.
The trial court decided, based on the evidence and comparison to prior case law rulings, this included the RSUs, which were awarded by his company as a “one-time celebratory grant.”
Husband – who chose to represent himself in the initial divorce proceeding – later appealed on this point (and others), arguing the RSUs were awarded as an incentive for future performance, rather than an award for past performance.
Appealing Equitable Distribution of Stocks
The appellate court in analyzing this point first noted the 1995 ruling in Pascale v. Pascale, wherein justices ruled property clearly qualifies for equitable distribution when it can be traced to the efforts of either spouse during the marriage.
What’s more, even property acquired after the divorce complaint is filed is “normally” subject to equitable distribution, assuming it’s the result of efforts expended during the marriage. The appellate division ruled in the 2004 case of Heller-Loren v. Apuzzio that stock options acquired during the marriage are subject to equitable distribution. One of the primary questions in that scenario will be whether the stock options were awarded in consideration for actions that were undertaken during the marriage. The burden to establish this rests with the party that is trying to have the stock options excluded.
Here, the issue for husband was a lack of evidence. In choosing to represent himself, he relied solely on his own testimony to establish these stocks were not part of the equitable distribution. The court provided defendant with additional time to offer up evidence to support this theory, but he did not. What’s more, there was evidence to support wife’s version of events: That the RSUs were awarded for husband’s work performance during their marriage. She presented a company overview indicating that RSU grants would be awarded in recognition of high-ranking performance – making no mention of using them as an incentive for future performance.
The trial court ruled the RSUs were subject to equitable distribution in the New Jersey divorce as husband provided no independent evidence to support the theory that it was an award for future performance. As the benefits weren’t transferrable outright to wife, husband was ordered to establish a trust to transfer her percentage of the value as the RSUs became vested. The Appellate court affirmed on this point.
This is just one instance that underscores the benefit of experienced East Brunswick divorce attorney helping to protect your rights and best interests.
If you are considering a New Jersey divorce, contact East Brunswick divorce attorneys at Rozin-Golinder Law LLC by calling (732) 810-0034.
Additional Resources: K.C. v. D.C., April 25, 2017, Superior Court of New Jersey Appellate Division
More Blog Entries: New Rule for NJ Child Relocation for Custodial Parents Moving out of State, Aug. 9, 2017, New Jersey Family Law Attorney Blog